Expectations remain low for the latest face-to-face talks, the first in 20 months, as the two Mideast neighbors, locked in their decades-old feud, are still divided by bitter differences. Following is a glimpse at both sides' stances.

ISRAEL

1, THREE REQUIREMENTS FOR FUTURE PALESTINIAN STATE

Netanyahu has repeatedly stressed his conditions for the establishment of a future Palestinian state, which include guaranteeing Israel's security, recognizing Israel as the homeland of the Jewish people, and existing as a demilitarized state.

Any final peace agreement "will be based on three initial components: First of all, on real and sustainable security arrangements on the ground; secondly, upon recognition of Israel as the national state of the Jewish people, and this means that the solution to a problem like the demand for return will be realized in the territory of the Palestinian state; and the third component, the end to the conflict. We are discussing a peace agreement between Israel and a demilitarized Palestinian state," Netanyahu said at a cabinet meeting on Aug. 22.

Netanyahu's spokesman Mark Regev firmly denied the requirements were preconditions for the direct talks, saying "they are just the Israeli positions brought into the peace talks."

2, NO PROMISE ON SETTLEMENT FREEZE

In contrast with his clearly defined requirements for a future Palestinian state, Netanyahu's plan of action on the thorny settlement issue remains in the dark.

Since U.S. Secretary of State Hillary Clinton announced the Washington meeting two weeks ago, the Israeli prime minister has made no clear-cut statement on whether to extend his government's partial suspension order on settlement construction in the West Bank, which expires on Sept. 26.

Netanyahu said in the past that the moratorium was for a defined period of 10 months and construction would resume in full afterward. On Sunday, he reportedly told ministers from his right-wing Likud party he had not made any promise to any U.S. official to extend the partial construction freeze.

Netanyahu's ambiguity has created tensions inside his right wing-dominated ruling coalition, as some hardliners have already begun pressuring him not to extend the moratorium.

Despite the pressure, sources close to Netanyahu told Xinhua an extension would win a majority within the political-security cabinet, a powerful narrow forum designated to outline Israel's foreign and defense policies. The premier would not ask the approval of the whole cabinet in order to forestall bitter sparring.

Meanwhile, Netanyahu's spokesmen recently said the issue would be discussed during the U.S.-brokered negotiations. The United States is Israel's most important ally, and President Barack Obama has put high stakes on the renewed talks.

3, OFFER GOODWILL GESTURES TO OFFSET SETTLEMENT DISPUTES

In a bid to placate Palestinians infuriated by Israel's continuous settlement construction, Netanyahu is set to offer Abbas several "goodwill gestures," political sources said Sunday.

Among the offers under consideration are releasing some Palestinians jailed in Israel, removing some military checkpoints in the West Bank, and relaxing the traffic limitations on Palestinian residents and goods.

Netanyahu has stressed these gestures would be made only when Israel sees the Palestinians are "serious in their intentions to advance through the (peace) process." The goodwill gestures are seen as a potential "creative solution" to the settlement construction dilemma that is threatening to derail the peace talks.

PALESTINIANS

1, ISRAEL COMPLETELY STOPS SETTLEMENT BUILDING

The Palestinian National Authority (PNA) said it wants Israel to completely stop Jewish settlement in the occupied territories rather than renew a temporary freeze of construction.

When the PNA talks about settlement freeze, "it means a comprehensive suspension of all settlement activities in the West Bank and in East Jerusalem," Saeb Erekat, a chief negotiator, has said.

Despite the resumption of the direct talks, Abbas would withdraw from the talks immediately if Israel resumed Jewish settlement activities in the occupied West Bank.

During a meeting for the Executive Committee of the Palestine Liberation Organization (PLO) in Ramallah this week,"Abbas pledged to withdraw immediately if Israel announced new plans to build settlements," Hana Amira, a member of the committee, said.

2, HAMAS REJECTS

The Islamic Hamas movement that rules the Gaza Strip rejected an international invitation for Israel and the Palestinian National Authority to resume direct negotiations.

The call by Washington and the Quartet of Middle East peace mediators "is a new attempt to exert trickery against the Palestinian people," Hamas spokesman, Sami Abu Zuhri, said.

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